Should You Rent a No-Fee Apartment?
NEW YORK ( MainStreet) Depending on where you live, if you rent an apartment through a real estate agent, you might have to foot the bill on their commission. Broker fees paid by the tenant are found in cities such as New York, Boston and Chicago and can cost up to a whopping 18% of one year's rent. That's why, in an effort to attract renters looking to avoid a pricey broker's fee, many real estate websites are now advertising what's known as "no-fee" apartments.
"A no-fee listing means the tenant is renting directly from the landlord without a broker, or that the tenant is using a broker but the landlord has agreed to pay the broker's fee," says Lee Lin, co-founder of RentHop.com, which advertises both fee and no-fee listings. Other sites offering no-fee listings include Craigslist.org, NyBits.com and NoFeeRentals.com.
While a no-fee listing might sound like a surefire way to save money on the apartment of your dreams, there are some caveats that renters should keep in mind. Here are a few questions to ask yourself to help you decide if a no-fee apartment is right for you.
What Type of Building Do You Want?
If you're looking for a larger building with multiple apartments, you'll likely find a good number of no-fee listings, since you can often rent units directly through the building's management company without the need for a real estate broker. However, if you're seeking a smaller building in a city where broker's fees are common, you might not have as much luck finding no-fee options.
"It's harder to find a small, walkup brownstone with just a handful of apartments that is listed by a management company, since they are typically owned by a smaller landlord who will let a real estate agent handle the rental process for them," says Kathryn Blaze, a real estate agent for Fenwick Keats Real Estate in Manhattan.
How Well Do You Know the Area?
If you're already familiar with the city where you're looking and have a good idea of the type of neighborhood and building you want, it might make sense to consider no-fee listings that don't involve a real estate agent, says Blaze. However, if you're not familiar with the area and/or don't have the time to conduct research yourself, it might be better to work with an agent even if you're required to pay a fee.
"For a lot of people, especially relocation clients that simply do not know the city and do not have a lot of time to find a place, apartment searching can be a really time-intensive process in terms of determining neighborhoods you want, seeking out buildings and scheduling appointments," says Blaze. "In that kind of scenario, it is always beneficial to have an expert who can guide you through the process and really take control to simplify things for you from start to finish."